Fed decision preview: What to expect of EUR/USD

By FXStreet FXStreet (Córdoba) – The Federal Reserve concludes its two-day policy meeting at 19:00 GMT and most analysts agree that Yellen and company will raise rates for first time since 2006 as the central bank moves toward policy normalization after the financial crisis required non-standard measures and record low rates.

More than 80% of markets expecting an increase of 25 basis points lifting the target range for federal funds to 0.25% – 0.50%.

Traditionally a rate raise will make the US dollar more attractive for high-yielding seeking investors, but with the lift-off taken as a done deal, most of it has been already priced in by financial markets so in absence of surprises, US dollar reaction could be limited.

Fed Chair Janet Yellen is to hold what will be a press conference 30 minutes after the release of the Fed’s statement. The Fed will also publish updated economic forecasts and a “dot plot” showing FOMC members’ expectations for the pace of future hikes, which could be more interesting for markets.

Many analysts anticipate the pace of further increases to be gradual amid concerns over weak growth abroad and excessive dollar appreciation amid divergent monetary policies between the US and other countries.

What to expect …read more

Source:: FX Street